The new generation of diners largely prefers to order in than eat out. Since most restaurants do not have an in-house ordering system, third-party food delivery services like Grubhub are becoming central to the restaurant industry.
These services are convenient for customers to use, and allow restaurants to reach their at-home targets. But are these food delivery applications all sunshine and rainbows like they present themselves to be?
Recent revelations have shown that they are anything but. Many restaurant owners have come out to speak of Grubhub’s unfair policies.
How Is Grubhub Hurting Businesses?
Grubhub charges a percentage of the order total for delivery fees, marketing commissions, and processing fees to every order that a restaurant receives through Grubhub. After their cut is taken out, many restaurants barely break even on the order, and some even lose money.
In March 2020, amidst the coronavirus pandemic, Grubhub started a Supper for Support program to help restaurants serve customers at home. The program offered customers a $10 discount on all orders over $30 at participating restaurants. For customers, this was a great deal. However, what Grubhub didn’t address is who would bear the brunt of the discount.
The Verge reported that restaurants that agreed to participate in the offer had to front the $10 discount themselves. In addition, the terms of the offer stated that Grubhub’s cut from the order would be calculated on the non-discounted price instead of what the customer would pay post-discount. In a time when most restaurants are struggling to make any profits, Grubhub made its exploitative policies even worse. Many restaurant owners came forward to criticize the company’s policies.
This is also not the first time that Grubhub has been accused of being unreasonable with its terms and conditions. In 2019, The New York Post reported on the stories of many New York restaurateurs who had been charged bogus fees by the company. Grubhub assumes that any phone calls to the restaurant that go on for over 45 seconds are being made to place an order. So the company automatically charges the restaurant for such calls, even if no orders were placed during the call. One restaurant owner claimed that he was charged about $2,000 a year in such bogus fees.
Is Grubhub That Bad?
Even without some of these extreme policies, Grubhub is severely affecting restaurants and their profits. The regular fees that businesses have to pay on every order they receive through Grubhub are so high that many restaurants often do not make much profit, if any at all.
Despite the comfort and convenience that food delivery applications provide to customers, their relationship with restaurants is largely exploitative. If these companies are left to their own devices, it is possible that some restaurants might lose money to the point where they might have to close their doors forever.
A few companies, such as GRUBBRR, are attempting to reduce dependency on such food delivery services by empowering restaurants with online ordering software and flat-rate fees. By using their own online ordering software, restaurant owners can be better prepared to move to an in-house delivery system to maximize profits and avoid being drained by services like Grubhub.
